【正文】 ies of red clause letters of credit are invariably brokers/agents of buyers in a particular field.A transferable letter of credit allows the beneficiary to act as a middleman and transfer his rights under a letter of credit to another party or parties who may be suppliers of the goods. Depending on whether the letter of credit permits partial shipments, fractional amounts may be transferred to more than one beneficiary. The letter of credit however, can be transferred only once: the secondary beneficiaries cannot transfer their rights to a third party. Transfer of a letter of credit can be made on specific application by the original beneficiary to the authorized transferring bank.To be transferable, a letter of credit must be so marked by the issuing bank which can only do so on the applicant’s specific instructions. The applicant should be aware that any second beneficiary, the probable supplier, is usually a party not likely known to the applicant.The terms and conditions of the transferred letter of credit must be identical to those of the original letter of credit with the following exceptions: The original beneficiary may be shown as the applicant on the transferred credit. The amount of the letter of credit, and unit prices if any, may be less than in the original letter of credit (the difference being the original beneficiary’s profit margin). The latest shipment date, if any, and expiry date as shown on the original letter of credit should be shortened. The percentage of insurance coverage, if any, should be increased to satisfy the requirements of the original letter of credit. When a drawing takes place, the original beneficiary normally substitutes his invoices for those of the second beneficiary for up to the amount and unit prices available under the original letter of credit, and draws the difference as profit.Although not recorded on a letter of credit, “backtoback” is a term used in transactions involving two irrevocable letters of credit.Such transactions originate when a seller receives a letter of credit covering goods which must be obtained from a third party who in turn requires a letter of credit. The “second” issuing bank looks to the first issuing bank for reimbursement after paying under the second letter of credit.The difference between backtoback letters of credit and transferable letters of credit, is such that in a transferable letter of credit, the rights under the existing letter of credit are transferred. In a backtoback transaction, different letters of credit are actually issued. Because technical problems can arise in backtoback transactions, banks tend to discourage their use.Under a deferred payment letter of credit, the applicant does not pay until a future date determined in accordance with the terms of the letter of credit. No drafts are called for, which avoids “stamp duties” charged by some countries on bills of exchange . One reason an exporter might extend credit terms to importer could be the petitiveness of the market and the need for the exporter to finance the importer if the exporter is to make the sale.Standby letters of credit may apply in general to transactions which are based on the concept of default by the applicant in performance of a contract or obligation. In the event of default, the beneficiary is permitted to draw under the letter of credit. Standby letters of credit may be used as a substitute for performance guarantees, or issued to guarantee loans granted by one firm to another, thereby securing payment to the creditor in the event the other party fails to repay its obligation on the due date. Even if the applicant claims to have performed, the bank issuing the letter of credit is obliged to make payment provided the beneficiary produces plying documents, usually a sight draft, and a written demand for payment.The sales contract is the formal agreement between the buyer and seller specifying the terms of sale that both parties have agreed upon. The contract should include: a description of the goods。 the amount。 the unit price。 the terms of delivery。 the time allowed for shipment and presentation of documents。 the currency。 and the method of payment.The bank’s letter of credit application and agreement forms, when executed, constitute a payment and reimbursement contract between the issuing bank and its customer. It is also the customer’s instruction to the issuing bank. The letter of credit must be issued exactly in accordance with the customer’s instructions。 therefore, it is important that the application be pleted fully and accurately, so as to avoid the inconvenience of having to have the letter of credit amended. The agreement constitutes an undertaking by the customer to reimburse the issuing bank for drawings paid in accordance with the terms of the letter of credit, and normally takes the form of an authorization to debit the customer’s account.The issuing bank prepares the letter of credit as specified in the application and forwards it by teletransmission or airmail to the advising bank, (a branch or correspondent of the issuing bank). The issuing bank instructs the advising bank as to whether or not to add its confirmation, as per their customer’s instructions.The advising bank forwards the letter of credit to the beneficiary (seller) stating that no mitment is conveyed on its part. However, if the advising bank has been asked to confirm the letter of credit and agrees to do so, it will incorporate a clause undertaking to honour the beneficiary’s drafts, provided the documents evidence that all terms and conditions of the letter of credit have been plied with.There is no limit to the number and variety of documents which letters of credit may stipulate. The following is a list of documents most monly seen in a letter of credit transaction. Each document is described in brief with a checklist for preparing the document.As already stated, the beneficiary should, on